Hawaii does have state income tax, and it applies to most residents and workers

Hawaii charges state income tax on wages, self-employment income, and other earnings. The tax rate ranges from 1.4% to 11%, depending on your income level. Unlike some states that tax only certain types of income or exempt retirees entirely, Hawaii taxes most forms of earned income the same way.

If you work in Hawaii or live there year-round, you will owe state income tax on what you earn. The state does not have a flat tax rate — instead, it uses a progressive system where higher earners pay a higher percentage. This means your tax burden depends on your total income for the year.

Key Takeaways

  • Hawaii's income tax rates range from 1.4% to 11%, with higher earners paying a larger percentage of their income.
  • The state taxes wages, self-employment income, rental income, and most other forms of earned money.
  • You owe Hawaii income tax if you are a resident or if you earned money while working in the state.
  • Hawaii does not offer a blanket exemption for retirement income, though some retirement accounts like traditional IRAs have federal tax advantages.
  • Non-residents who work in Hawaii may owe state tax on income earned within the state, even if they live elsewhere.

How Hawaii's income tax brackets work

Hawaii uses tax brackets that increase with income. For the 2024 tax year, a single filer with income under $2,400 pays 1.4%. As income rises, the rate steps up — at $3,500 it becomes 3.2%, at $5,200 it becomes 5.5%, and so on, reaching 11% on income over $48,000. Married couples filing jointly have higher bracket thresholds, but the same rate structure applies.

The way brackets work: you do not pay 11% on all your income if you cross into the highest bracket. You pay the lower rate on the income that falls within each bracket, then the higher rate only on the amount above that threshold. For example, if you are single and earn $50,000, you pay 1.4% on the first $2,400, then 3.2% on the next portion, and so on until you reach the 11% bracket for income above $48,000.

Hawaii updates its brackets each year to account for inflation, so the exact dollar amounts shift. The Hawaii Department of Taxation publishes the current year's brackets on its website before the tax year begins, and most tax software updates automatically to reflect the current brackets.

Who has to pay Hawaii income tax

Residents — anyone who lives in Hawaii for the entire tax year owes tax on all income earned anywhere. If you moved to Hawaii partway through the year, you are considered a resident for that year and owe tax on income earned after you arrived.

Non-residents who work in Hawaii — if you live outside Hawaii but earned money while working in the state, you owe Hawaii tax on that income only. A person who lives in California but works remotely for a Hawaii company, for instance, would not owe Hawaii tax. But someone who travels to Hawaii for contract work or a seasonal job owes tax on what they earned there.

Part-year residents — if you moved to or from Hawaii during the year, you owe tax on income earned while you were a resident. The state considers you a resident starting the day you arrive with the intent to stay, not just the day you establish a permanent address.

Types of income Hawaii taxes

Hawaii taxes wages and salaries from employment, self-employment income from running a business or freelancing, rental income from property you own, capital gains from selling investments or real estate, and interest and dividends from savings and investments. It also taxes income from pensions and annuities, though some retirement accounts receive federal tax treatment that may reduce your state tax burden.

The state does not tax Social Security benefits — that income is exempt. Contributions to certain retirement accounts, like traditional IRAs and 401(k)s, may reduce your taxable income, but Hawaii does not offer its own state-level retirement income exemption the way some states do. If you withdraw money from a traditional IRA or 401(k) in retirement, that withdrawal counts as income and is subject to Hawaii tax.

Military pay for active-duty service members is exempt from Hawaii income tax, even if you are stationed there. However, reserve and National Guard pay may be taxable depending on the circumstances.

How to file and pay Hawaii income tax

You file Hawaii state income tax using Form N-11 (for single filers) or Form N-12 (for married couples filing jointly) if you take the standard deduction. If you itemize deductions, you use Form N-11NR or N-12NR. These forms are available on the Hawaii Department of Taxation website.

The important date to file is the same as the federal important date — typically April 15 of the year following the tax year. If you file your federal return and owe federal tax, you almost certainly owe Hawaii tax as well. If you file federal and receive a refund, you may also receive a Hawaii refund, though the amounts are separate.

You can file by mail, electronically through the state's online system, or through a tax software provider that supports Hawaii returns. If you owe tax, you can pay online through the Hawaii Department of Taxation website, by mail, or through an authorized payment processor. Paying online usually processes within one business day.

Deductions and credits available in Hawaii

Hawaii allows a standard deduction that varies by filing status and age. For 2024, the standard deduction for a single filer under 65 is $2,600; for married filing jointly it is $5,200. If you are 65 or older, the standard deduction is higher. You can choose to itemize deductions instead if your may be able to access expenses exceed the standard deduction.

The state offers a dependent exemption — you can subtract a set amount for each dependent child or other may have access to person you support. Hawaii also has a child and dependent care credit if you paid for childcare to allow you to work, and an earned income credit for lower-income workers that can result in a refund even if you owe no tax.

Some counties in Hawaii offer property tax relief or credits for homeowners, though these are local programs rather than state-level tax reductions. Check with your county assessor's office to see what may be available where you live.

Comparing Hawaii's tax burden to other states

Hawaii's top income tax rate of 11% is higher than most states. For comparison, California's top rate is 13.3%, Oregon's is 9.9%, and Washington has no state income tax at all. However, Hawaii's lowest bracket of 1.4% is lower than many states' starting rates, so the overall burden depends on your income level.

Hawaii also charges a general excise tax (GET) of 4% on most goods and services, which is higher than the sales tax in many mainland states. This means your total tax burden in Hawaii includes both income tax and a higher consumption tax. When you add these together, Hawaii residents typically pay more in total state and local taxes than residents of states with no income tax.

If you are considering moving to Hawaii or comparing your tax situation to another state, factor in both income tax and the general excise tax. A person earning $60,000 in Hawaii will pay state income tax plus GET on purchases, whereas the same person in Washington or Nevada would pay no state income tax, though they would pay sales tax on purchases.

What happens if you do not pay

If you owe Hawaii income tax and do not pay by the important date, the state charges interest on the unpaid amount starting from the due date. The interest rate changes quarterly and is based on the federal rate plus a percentage set by the state. You also face penalties — typically 5% of the unpaid tax if you file late, and an additional 5% if you do not pay on time, up to a maximum of 25%.

If you do not file at all, the state can file a return on your behalf based on information it receives from employers or financial institutions. This return may not include deductions or credits you are may have access to to, so you could end up owing more than you actually owe. The Hawaii Department of Taxation can also place a lien on your property or garnish your wages to collect unpaid tax.

If you believe you made a mistake on your return, you can file an amended return using Form N-11X or N-12X. You have three years from the original due date to file an amendment and claim a refund.

Frequently Asked Questions

Do I have to pay Hawaii income tax if I just moved there?

You owe Hawaii tax starting the day you become a resident — which is when you move there with the intent to stay, not necessarily when you sign a lease or buy a home. If you moved to Hawaii on July 1, you owe tax on income earned from July 1 through December 31 of that year. You file a part-year resident return showing income earned before and after you moved.

What if I work remotely for a company outside Hawaii but live in Hawaii?

You owe Hawaii income tax on that income because you are a Hawaii resident. Your employer's location does not matter — residency does. If you are a non-resident who works remotely for a Hawaii company, you would not owe Hawaii tax because the income was not earned in the state.

Does Hawaii tax retirement income differently?

Hawaii does not exempt retirement income the way some states do. Withdrawals from IRAs, 401(k)s, pensions, and annuities are taxable as income. Social Security is exempt, and military retirement pay has special treatment, but most other retirement income is subject to the same tax rates as wages.

Can I deduct federal income tax paid from my Hawaii return?

No. Hawaii does not allow you to deduct federal income tax paid. You can only deduct state and local taxes paid, and only if you itemize deductions instead of taking the standard deduction. Most Hawaii filers use the standard deduction, so this deduction does not explore to them.

What if I owe both federal and Hawaii tax but can only pay one?

Pay the federal tax first. The IRS has more enforcement power and can seize assets or garnish wages more aggressively than the state. Contact the Hawaii Department of Taxation to discuss a payment plan for the state amount — they may offer an installment agreement that lets you pay over time without additional penalties accruing.